Yahoo And Facebook Settle Patent Fight, But Damage To Yahoo's Reputation May Linger

from the scott-thompson's-legacy dept

Back in March, Yahoo made some news by suing Facebook for patent infringement. This was the first major initiative by new CEO Scott Thompson, who apparently was not only oblivious about why you shouldn't lie in your resume, but also completely clueless about how Silicon Valley views patent infringement claims as a sign of absolute weakness. It's a sign of a company that has ceased to innovate. The reaction was pretty loud... but was quickly drowned out by the furor over Thompson's resume, causing him to lose his job. Ross Levinsohn was put in his place, and it appears that his first major act of business was to settle the lawsuit without any money changing hands.

There's a cross-licensing deal as well as some vague claims of a "partnership." However, the details suggest the "partnership" is just a general agreement to try to work together. The licensing agreement involves about half of Yahoo's patents... but also a promise not to sue over the other half.

There were a bunch of patent lawyers -- and some clueless Wall St. types -- who cheered on the patent infringement lawsuit, because they view things in the ultimate short term: if you're not getting paid for your patents, then you're "leaving money on the table." Folks in Silicon Valley mostly know better. You don't build a successful long term strategy by suing other companies that it's going to make sense to work with in the future. You especially don't go patent crazy if you want to retain top engineering talent. This may be difficult for patent lawyers and Wall St. investors to understand, but playing for the long haul means recognizing that there's more than one move on the chess board, and attacking on every single play isn't a good strategy. The real question, though, is if the stink that was attached to Yahoo from this move lingers, or if the company is able to shake it off and just pin the blame on Thompson's brief and horrific tenure.

Sorry I was late

mega-corp

So another mega-corporate "partnership" has been born from this patent litigation. Doubtless such an arrangement will benefit both Yahoo! and Facebook; but I predict that consumers will eventually be the losers in this deal.